Gov. Phil Murphy has proposed spending $12.1 billion on funding for K-12 school districts in the 2026 fiscal year state budget, with more than two thirds of New Jersey districts seeing an increase in their state aid.
The state Department of Education released anticipated state aid figures for the state’s nearly 600 districts Thursday. The proposed budget includes a $386 million increase in K-12 aid from the previous year.
About 68% of districts will see an increase in state aid, while 31% will see a decrease, state officials said.
This year, Murphy’s administration has also made state aid increases and cuts more predictable for school districts by capping increases at 6% and limiting cuts to 3% or less in major funding categories.
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“It’s no secret that this was a tough budget year for the state, but over the last eight years, Gov. Murphy has ensured that the public education system remains at the forefront of his priorities for New Jersey, and this budget is no different,” state Education Commissioner Kevin Dehmer said in a press briefing Thursday.
Before Murphy unveiled his budget earlier this week, state officials announced the new 3% cap in reductions for four primary aid categories, aiming to establish “guardrails” to reduce districts’ financial instability from year to year.
The cap on cuts was in stark contrast to last year when some school districts saw double digit decreases as the state fully implemented a new school funding formula.
Overall, Murphy’s $58.1 billion budget proposal for the 2026 fiscal year would spend $1.2 billion more in taxpayer funds than it is projected to take in.
It is unclear how the budget plan may change before the start of the new fiscal year on July 1. The budget must be approved by the state Legislature and signed by Murphy before it becomes law.
The 3% limit on cuts to school district will apply to the four primary aid categories, officials previously said. The categories include equalization, special education, security, and transportation aid as calculated under the School Funding Reform Act of 2008.
State officials also instituted a 6% cap on increases in state aid.
However, some districts may see higher total increases or decreases because not all aid categories are included in the cap.
Other aid categories, including choice funding, military impact aid, county vocational stabilization aid and educational adequacy aid, are determined through factors like enrollment, and are exempt from the cap, state officials said.
Other changes to the state’s funding formula include using three-year averages for property values and income data, instead of using the most recent year’s data, and calculating special education funding with a district’s special education enrollment, instead of the previous, U.S. Census-based method.
“Those adjustments reflect the most common and significant themes we heard from educators and advocates over the years of implementing S2,” said Dehmer, referring to the new funding formula that was first enacted in 2008.
State officials are also providing a “mechanism” for flexibility that could allow school districts to raise school taxes above the current 2% cap, state officials said.
It’s unclear how the additional tax levy growth cap will work.
“We’re still planning on the details of exactly what that will look like,” said Dehmer. “But in general, we’re going to be targeting those districts that are taxing below what’s called local fair share, to give them the opportunity to get up to that level of local revenue.”
School funding has long been a contentious issue in New Jersey.
Districts in the state all receive different amounts of state aid based on enrollment, poverty levels, the tax base of the community and a myriad of other factors.
Under a heavily debated revised school funding formula enacted under then-Gov. Chris Christie, some districts have seen their aid decrease over the years as the state adjusted numbers to match the new formula.
Although the formula was passed more than 15 years ago, the 2025 state budget was the first time it was fully funded, state officials said.
Districts with growing enrollment may see more state dollars while those losing students may get less state aid. Districts may also gain aid if their tax base is weakening or lose state aid if there’s growth in the local economy.
Officials in some school districts that have experienced steep cuts in recent years say the formula is unfair.
Under the $11.7 billion school funding plan Murphy proposed for the 2025 state budget, 442 school districts saw an increase in state aid. Meanwhile, 140 districts saw a decrease, with some losing millions of dollars.
Some of those districts announced teacher layoffs, cuts to busing and the closing of schools after the cuts to state aid.
Stories by Brianna Kudisch
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Brianna Kudisch may be reached at bkudisch@njadvancemedia.com.